FTX founder Sam Bankman-Fried was arrested on Dec. 12 in the Bahamas, according to several news reports. The U.S. government's request for his arrest, based on a sealed indictment filed by the U.S. District Court of the Southern District of New York, came a day before Bankman-Fried was due to appear before the U.S. House Financial Services Committee to answer questions about the collapse of the major cryptocurrency exchange he formerly ran as CEO.
- Disgraced FTX founder Sam Bankman-Fried was arrested Monday by local police in the Bahamas after a request to do so from the U.S. government.
- Bankman-Fried is being charged with wire fraud, securities fraud, wire fraud conspiracy, securities fraud conspiracy, and money laundering.
- Bankman-Fried is expected to be extradited soon to the U.S. to face criminal charges in what will be a closely examined case.
Bankman-Fried Charged With Fraud, Money Laundering, and Conspiracy
The Royal Bahamas Police Force arrested Bankman-Fried, according to a statement released on Monday. The former FTX CEO will be extradited from the Bahamas after U.S. officials make the request. What happens next in his case could have far-reaching implications for the cryptocurrency industry.
The New York Times reported the specific charges against Bankman-Fried to be wire fraud, securities fraud, wire fraud conspiracy, securities fraud conspiracy, and money laundering. The Securities and Exchange Commission (SEC) has authorized separate charges against the former FTX CEO. All are criminal charges that carry heavy penalties, and Bankman-Fried’s case will receive intense scrutiny.
The attorney general of the Bahamas, Ryan Pinder, also released a statement on the arrest, saying that a U.S. extradition request would be answered promptly. Meanwhile, Bahamas Prime Minister Philip Davis said that his country would continue its own investigation of FTX, which was incorporated in the Bahamas. Bankman-Fried will appear in a Bahamian court on Tuesday.
Authorities in the Bahamas are not without their own share of controversy. U.S. lawyers made the claim that officials there had asked Bankman-Fried to gain access to systems and help the country mint a new cryptocurrency.
Bankman-Fried Arrest's Fallout for Industry
Bankman-Fried’s arrest comes at a dramatic moment, as he also was set to appear before the U.S. Senate Banking Committee this week. Only hours before his hearing, the Senate committee said that Bankman-Fried refused to appear and would not accept the service of a subpoena. The committee called this “an unprecedented abdication of accountability.”
The arrest could mark a major turn of events for the crypto market and certainly for Bankman-Fried, once the poster boy of the industry. Former federal prosecutors have stated that there could be significant jail time in store for Bankman-Fried, totaling many years. Bankman-Fried faces several civil charges as well from angry customers who have lost money in the $8 billion case.
The SEC also has commented on the matter, and has authorized separate charges of securities law violations.
Crypto Community Celebrates Arrest
Several members of the crypto community, and some outside it, commented on Twitter Tuesday about the high-profile arrest of Bankman-Fried. Eight founder and CEO Michaël van de Poppe perhaps facetiously suggested that the market would skyrocket, while the crypto community in general joked about the arrest.
Peter Schiff, a prominent crypto skeptic, also offered his opinion on the arrest. He said he wasn’t sure why the government authorized the arrest before Bankman-Fried appeared before Congress. Bitinning founder Kashif Raza said the same, wondering why the arrest was made before the hearings. Others pointed out that the arrest comes at an odd time, after Bankman-Fried allegedly made donations to Democratic politicians.
The Bottom Line
Bankman-Fried’s arrest may be the most dramatic event yet in the FTX case. It may portend the beginning of the end in the FTX exchange saga, but the collapse continues to have effects on the crypto market. For example, Bitcoin is hovering around $17,000 and may face some rough months ahead as the FTX prosecution unfolds.